The Most Important Question You’ll Ever Ask Your Financial Advisor


Does your financial advisor follow the Fiduciary Standard or the Suitability Standard?

If you don’t know the answer without peeking – or calling your Lifeline – you’re not alone. A surprising number of people don’t know what these very important terms mean and whether their advisor is acting in their best interest.

Aren’t all financial advisors required to act in their client’s best interest?

Surprisingly, not all financial advisors are.

Broker-dealers, insurance salesman, and bank and financial company representatives, for instance, are only required to follow a Suitability Standard. That means they must provide recommendations that are “suitable” for a client – based on age for instance, or aversion to risk – but that may or may not be in that client’s best interest.

Having a waiter recommend an expensive chocolate cake that is “suitable” for adults and for someone who is willing to risk trying chocolate with sea salt may not be that critical, in spite of the fact that having fresh strawberries may clearly be in your best interest. But having a financial advisor who is making recommendations primarily based on your age and risk tolerance – and who could be putting their own, or their company’s, financial interests ahead of your interests — could be disastrous for your financial future.

Instead, the Fiduciary Standard, which is the standard for registered investment advisors under state and federal regulations, requires that financial advisor act solely in a client’s best interest when offering financial advice.

Registered Investment Advisors – like Sherman Wealth Management – must follow – and are held to – the Fiduciary Standard. That means that a RIA must put their client’s needs ahead of their own, provide fully-disclosed, conflict-free advice, be fully transparent about fees, and continue to monitor a client’s investments, as well as their changing financial situation.

Here’s a potential scenario that illustrates the differences

Let’s say your broker-dealer has three possible funds to recommend to you. The first is a “suitable” index fund, offered by her own company, which pays her a 6% commission on the sale and charges a 2% annual fee. The second is a similarly suitable index fund that would pay her a 3% commission on the sale and has a 1% annual fee. The third is an index fund that has no sales commission and an annual fee of .5%. Under the Suitability Standard, she can recommend the higher priced fund and still satisfy the standard. Under the Fiduciary Standard, she would be required to recommend the third fund.

This is not to suggest that broker-dealers or others operating under the Suitability Standard don’t look out for their clients.  While many reps who follow the Suitability Standard give their clients excellent advice, they operate with an inherent conflict: the pressure to sell products that are more profitable for them and/or their firm can be important factors in how they direct you to invest.

So go ahead and let the waiter talk you into that chocolate cake (even though you know you’ll feel better tomorrow if you have the strawberries.) But when it comes to your money, think carefully about whose advice you are taking.



Donald Trump and the Benefit of Financial Foresight


Donald Trump’s current net worth – as he would be the first to tell you – is estimated to be between $2 and $4 billion, most of which he made through inheritance and real estate investments, along with other business dealings. An article in National Journal recently took a look at what might have happened if he had invested in an S&P 500 index fund back in 1982 when his inherited real estate fortune was estimated to be worth “only” $200 million.  According to National Journal’s calculations, if he’d invested carefully in index funds, Trump’s net worth would be a whopping $8 billion today.

Does this mean Donald Trump is a bad investor? Not necessarily: the oldest lesson on Wall Street is that everything is easy in hindsight.

While highly speculative, those numbers do highlight the ongoing debate over which is a better investment – real estate instruments or stocks. Both stocks have and the real estate market have had great runs in recent history and, depending on when you invested, you could make cases for both investments being the better choice.

But the stock market and the real estate market both experience volatility, dips, and extended recovery times so, for the average investor, a portfolio composed of mainly real estate or other fixed assets (like art or collectibles, for instance) poses some risks that should be hedged with proper cash flow planning, a diversified portfolio, and proper tax planning.

Cash Flow Planning

A good financial plan takes into account how much cash you need access to, or may need access to in the future. Cash flow planning should be a key factor in deciding whether real estate investments are part your individualized financial strategy.

As National Journal points out, Trump claims he is willing to spend upwards of $1 billion of his own money to fund his presidential campaign, yet his financial disclosure statements show that he may have less than $200 million in cash, stocks, and bonds. The rest of his fortune is tied up in real estate investments, which could be much harder to liquidate and use for his campaign.

Most of us aren’t running for president but, if something like the 2007 housing collapse were to happen again, any investor who is predominantly invested in real estate could have problems liquidating those – diminished – assets for retirement, college funding, or other non-presidential goals.

A solution: diversification.


Whether you are investing in real estate or the stock market, diversification is always a prudent way to address your own risk tolerance and use proper foresight in creating a winning strategy.

While with real estate funds, diversification can be achieved via many factors, including residential vs commercial investments, differing location focuses, and differing interest rates and financing mechanisms, it is still fundamentally one sector, subject to sentiment and swings.

With the stock market, on the other hand, diversification allows you the opportunity to invest not only in different asset classes, such as stocks, bonds, and money market funds, but in a variety of sectors and industries as well. Over the past 60 years, historically, the stock market has averaged an 8% annual return, so investors with strategically balanced and diversified portfolios, there is the opportunity for steady, while not spectacular gains, with the potential for less risk than investing only in the real estate market.

An investor who is properly diversified through multiple asset classes – including real estate if it makes sense for their own customized strategy – is potentially better protected against the short term results of one asset class experiencing a crash or a prolonged dip.


Another thing to consider is that options for investing in real estate in IRAs and other tax-deferred accounts are complicated and not every custodian will allow you to include real estate investments in a tax-deferred account.

Hindsight vs Foresight

While Donald Trump is an outlier because his high net worth shelters him from some of the issues with primarily being invested in real estate, it’s intriguing to consider “what if.”

In the case of a more typical investor, a little foresight can go a long way in making sure you are on your way to achieving your own financial goals. A sound financial plan should be tailored to individual goals and cash flow needs, with a customized cash flow plan, and diversified across multiple asset classes for the potential for steady and compounded growth over time.

Whether you are a Donald Trump with a large inheritance or a young professional just getting started, a solid plan and strategy puts the benefit of hindsight where it belongs: in a conversation over coffee or cocktails, and not as the basis for a winning investment strategy.

My Response To a Millennial’s Open Letter To CNBC


After the markets took an incredibly volatile ride on August 24th, published this letter to CNBC from a millennial named Ryan, who wrote:

“I’ve dipped my toes in the stock market this past year but after today’s action, I have to say I’m done. Forever. Gone. Don’t count on another dime of mine in the market.”

Ryan isn’t alone. A surprising 74% of Millennials surveyed said they do not own stocks. And that’s unfortunate for Ryan and his fellow GenY-ers.

Ryan’s letter is worth a read – and he’s makes a couple of good points – but he’s also misses a very important point: none of this should really matter to a Millennial.

Here’s why.

“I’m sure countless little guys had their stocks absolutely steamrolled this morning only to see the big guys scoop up the shares on a discount.”  

There is obviously a wide range of ways to experience the market: as a small investor, as a large investor, and as a robot.  Are other people going to do better than you sometimes? Sure. They’re also going to do better than you at sudoko, finding parking spaces, and – unfortunately in my case – Fantasy Football as well. But that shouldn’t matter to you, and shouldn’t keep you from investing in your own financial independence.

The stock market is volatile and, sure, some investors may make impressive bets while others experience much too impressive losses (all investing involves risk, including the risk of the loss of principal.) But, historically, the S&P 500 averaged a 7-8% return (after inflation)* each year and that’s value you’re missing out on if you’re not invested.

 “The only “people” who can react to those pricing distortions in real time are computers. This isn’t a place for small time people like me.”

Nothing beats human guidance and judgment to prevent panic selling or override a previous decision when a drop in a price is anomalous and not due to a fundamental loss in value. Having a plan and sticking to it is usually the best approach and there are great Financial Advisors ready to help you or sharing their insight on the web.

“The only reasonable thing that any little guy can do is sit back and say, “Wow there is a lot of distortion going on and I can’t even guess at these prices.”

Investing shouldn’t be guesswork and doesn’t have to be. A good financial advisor – or your own research – can help you select a diversified group of financial instruments tailored to your own financial goals and risk tolerance. With that in place, along with a well-thought-out plan for steady saving and investing, market price fluctuations should not disrupt your plan. If you’ve got a solid financial plan, investing in the stock market does not affect your ability to pay your rent, take care of yourself or your family, or add to that rainy day emergency fund.

I hope you reconsider, Ryan.

As Millennials, we’re in it for the long haul, we have years of disciplined savings ahead of us with interest that will continue to compound if we avoid reacting emotionally to the markets.

Once the uneasiness of August 24th has worn off (and much of that day’s paper losses have already been recovered,) I hope you and the millions of Millennials who are not yet investing, take advantage of the opportunity to invest while you are young, to maximize your options for reaching your own financial goals, whatever they may be.




3 Winning Strategies Investing and Fantasy Football Share

Fantasy Football Goal

As the NFL season begins, millions of fantasy football fans are busy researching and drafting their teams. And this season, as in previous ones, fans will be wondering why some fantasy team managers just seem to have a knack for finding those sleepers and high upside players, while other managers routinely fail to understand and predict player value.

Investors often wonder the same thing: why do some investors consistently get it right and prosper, while others are lucky if they even break even?

Coincidence? Maybe, but there are several important things successful fantasy football managers have in common with successful real-life investors.

Here are three important mindsets that can help you go the whole 9 yards, whether it’s on the virtual gridiron or with your own financial plan.

Research the Players

A good fantasy football manager knows that you need to study all the different variables – including roster positions, draft picks, and expected performance – to build a winning team. Understanding the available options is critical to determining things like how many players you need at each position and which players you think will be the best.

This same principal applies to investing. A smart investor or financial advisor starts by understanding all the different variables, such as capital, types of investments, and asset classes. Understanding the pros and cons of various investment strategies is critical in determining how to choose a strategy that is the appropriate option for your own goals and needs.

Never count on a couple of stars to carry the team

When drafting your fantasy team, you always want to diversify your risk. You might not want to draft multiple offense players from the Green Bay Packers, for instance, even if that team is loaded with talent, because, if Aaron Rodgers and company have a bad week, your fantasy team will be struggling too. Smart fantasy managers build a stable foundation and don’t just count on rising stars.

When building your investment portfolio, risk diversification is critical as well. Wall Street is littered with stories of investors who put all their eggs in one “sure” basket, only to learn the lesson of diversification the hard way. Even if you’re extremely confident that a certain sector is a good bet, it’s usually better to diversify and limit your amount of exposure to individual sectors. That way, even if the sector doesn’t do as well as you had anticipated, your investments are distributed across other asset classes, and your risk should be better managed.

When the going gets tough, the tough stay disciplined

Anyone who has played fantasy football knows the danger of making a snap waiver wire decision you’ll regret later. On one hand, you don’t want to panic and drop your star player after a rough few weeks, only to see him rebound to a MVP-caliber season (and on someone else’s team!) On the other hand, just because an unproven player has a great week doesn’t mean he’s more valuable than the player you’d have to drop in order to acquire him.

When the market hits a volatile patch, it takes a disciplined investor to trust their plan and avoid making snap decisions about buying and selling. A look at the history of the stock market makes it abundantly clear that investors who take a long term view do better than those who shift their investment strategies with every changing wind. This doesn’t mean that any plan should be viewed as foolproof; a good investor or financial advisor knows the value of reassessing and recalibrating appropriately and strategically. What it does mean is that, when the going gets tough, a prudent investor takes the long view, stays disciplined, and sticks to a strategy.

It’s a long season

The only NFL team in history to have an undefeated season is the Miami Dolphins who finished 17-0 in the shorter 1972 season. No NFL team has gone 19-0 to date so it’s highly unlikely that any fantasy team will achieve perfection either. But that doesn’t mean you can’t have a great season and get smarter and smarter about putting together a winning team.

With investing too, there will always be ups and downs, touchdowns and penalties, fumbles and conversions, and a few Hail Mary’s. But with a solid game plan and clearly defined goal, you’ll be on your way to a putting together a strategy designed to stand the test of time and put you squarely where you want to be: heading toward your own end zone with your eye on the ball and your own goals in sight.




Straight Talk about Volatility and Compound Interest – the Snowball Effect


Compound interest is, simply put, the interest you earn on the sum of both your initial investment and the interest that investment has already earned.

Why is it important? Because your two potential advantages when it comes to maximizing potential earnings over time are:

  • The power of compound interest
  • Investing regularly through market highs and lows

Let’s break this dynamic duo down:


The Power of Compounding


Compound interest is often compared to a snowball. If a 2-inch snowball starts rolling, it picks up more snow, enough to cover its tiny circumference. As it keeps rolling, its surface grows, so it picks up more snow with each revolution.

If you invest $1000 in a fund that pays 8% annual interest compounded yearly, in 10 years you’ll have $2158.93, in 20 years that will be $4660.96, in 30 years it will be $10,062.66, and in 40 years it will be $21,724.52. All it takes is patience to turn $1000 – the price of one ski weekend – into $21,724.52.

That’s why it’s so important to start saving early.


The above chart is hypothetical and assumes an 8% rate of return compounded annually. It is for illustrative purposes only and is not indicative of the performance of any specific investment.   Investment return and principal values will fluctuate so that your investment when redeemed may be worth more or less than its original cost. Rates of return do not include fees and charges, which are inherent to other investment products. Past performance is no guarantee of future results.


Volatility – Market Highs and Lows


But what happens if the market dips and your investment loses value?

Volatility – when market value fluctuates up and down – can be an opportunity for disciplined savers who contribute regularly to their investments, regardless of share price. When prices are low, you’re able to buy more shares. When prices are high you’re able to buy fewer shares for the same amount but those shares earn more interest, which is called Dollar Cost Averaging (Dollar cost averaging does not protect against a loss in declining markets. Since such a plan involves continuous investments in securities regardless of the fluctuating price levels, the investor should consider his or her financial ability to continue such purchases through period of low price levels.)

Imagine that snowball again, rolling down a hill, acquiring more and more snow as it goes. What happens when it hits a bare patch with no snow? Often it picks up rocks and pebbles, which add even more surface volume. So, when it hits the snow again, it picks up even more because it’s larger.

That’s how compound interest, coupled with regular investments, may work too: the “rough patches” produce more volume, which then allows you to acquire more compounded interest. So if you buy more shares during a dip, when the market recovers you could hypothetically not only earn compound interest on more shares, you earn more interest. So long as the price of your particular investment recovers, of course.

As Josh Brown points out in his recent blog post about Warren Buffett and David Tepper, both these legendary investors have gotten to where they are today because they’ve successfully ridden out volatility. In 1998 Warren Buffets own Berkshire Hathaway’s “A” shares had dropped in price from approximately $80,000 to $59,000 but Buffet didn’t sell. Those shares just hit a high of $229,000 this year.

If you see volatility – like what we experienced in August – as a tool and keep contributing regularly to your investments, you’ll potentially maximize the effect of compounded interest and watch your investments snowball over time!






Additional Reading:

Has the Internet Replaced Personal Financial Advisors?

human technology

With the wealth of information readily available online, it’s easy to feel that we’re all experts about everything. From scouring the finance blogs and Twitter for the latest “surefire” ways to beat the market, to diagnosing our aches on WebMD, to grilling along with Bobby Flay on YouTube, it can seem like we have almost instant access to the same information as the pros.

So when it comes to personal finances, why is it necessary to have a financial advisor when financial news is so readily available, Twitter is flooded with “hot tips,” robo advisors are ready to automate the whole process for you, and comparison shopping is so easy? Why can’t you just use this treasure trove of information to make your own financial decisions? Or subscribe to an algorithm-based service that will make the best lightning-quick decisions for you?

A couple of reasons…

If you’re good and you dedicate a lot of time online, you can definitely pick up some great information and strategies that the experts are sharing (follow me on Twitter by clicking here!) The tricky part is making sure that the information and the strategies are actually appropriate for you and appropriate right now. We all know that, if we’re not careful, the instantaneous nature of the internet, social media, and impersonal algorithms can lead to impulsive decisions that may not support our own long-term goals and personal risk profile. Quick reactions to new stock market “darlings” or to sudden market volatility can lead to choices that are not the best for your long – or even near – term financial health and growth. In fact, there is a whole science called Behavioral Finance that addresses how personal biases can lead investors to make decisions that actually work against the goals they set for themselves.

A good financial professional is able to sift through the vast amount of information available to you and determine what is significant to your strategy and what may just be a distraction. A financial advisor who understands Behavioral Finance can help you see where your assumptions, habits, and biases about money and investing may be leading you to get in your own way.

The new algorithm-based platforms are increasingly interesting and have a lot of merit, but the level of personalization is not yet very deep. That means that portfolios are based on broad criteria that may have nothing to do with your current situation, lifestyle, and goals. Again, this is where a trained professional will be able to view your unique individual needs and create a tailored strategy that is geared to you and not just everyone who matches your age and salary level. As more and more fiduciary financial advisors are starting to use smart algorithms as part of their offerings where appropriate, the key is “where appropriate” and “in the clients’ best interest,” the very definition of a fiduciary.

Think about it: would you rather grill along with Bobby Flay on your iPad or would you rather have regular meetings with Bobby, where he looks at the size and model of your Weber, the size of your shrimp, and the recipes you’re trying to learn, and works with you to make sure you become the master of your own grill? (and shrimp!)

The same goes for your financial future. While do-it-yourself is getting easier and easier, that doesn’t necessarily mean it’s getting better and better. Look for a fiduciary financial advisor who also has access to the latest information online and is familiar with the latest algorithmic innovations, but who uses that information to get to know clients individually, and tailors a long-term growth strategy for them that will put them on the road to achieving the goals they have set for themselves.


With over a decade’s worth of experience in financial services, Brad Sherman is committed to helping his clients pursue their financial goals. Learn more about our Financial Advisor services.

Follow us on Twitter to stay up-to-date with investment news and wealth management information.



What Should You Do in a Market Sell-off? Rule #1: Don’t Panic


Whenever there’s a crisis, it’s good to have an emergency plan, and when there’s a financial crisis, it’s good to have a financial emergency plan. When you’ve thought through a plan, it’s less likely that panic – or other “behavioral mistakes” – will lead you to react in ways you may be regretting for a long time.

While most investors say they’ll continue to hold on to their investments when there’s a sharp downturn (and many even say that they’ll add money when their investments go down), data tells a far different story. In December 2008, right as the market was near its lowest point, investors pulled out a whopping $10.6 billion from equity mutual funds alone.

Panicking during market bottoms is a form of “behavioral bias” that can have a devastating effect on financial health. While the S&P 500 has averaged around 10% a year, costly behavioral mistakes cause many individual investors to significantly miss those gains. That’s because, despite good advice, people still tend to put money in the stock market as it rises and pull money out as the market falls. The result: many investors buy at market tops and sell at market bottoms.

While none of us are immune to behavioral biases, there are several things we can do to help avoid costly mistakes.

1.  Learn From the Past

The first step is to understand that market declines are a normal part of investing and resist the urge to panic!

CRSP 1-10 Index

While the S&P has historically returned almost 10% annually since the 1960s, those returns are not consistent. One year the market could be up 20% and the next it could decline 12%! To make the ride even bumpier: the market also has streaks where returns decline for several consecutive years. That’s when investors often begin to panic and pull their money out. Unfortunately, that’s usually the worst time to do so, and when investors often should be increasing their investments instead.

Although the market can move up and down in the course of a year, or several years, it has historically trended upwards over longer periods of time (10 or 20 years.) So if your investment horizon is longer than just a few years, remember that it’s likely the market will recover its losses – and then some – over time.

Understanding that the U.S. stock market bounces back after its declines is a helpful first step in creating “un-biased” financial habits!

2.  Understand that Accepting Lower Returns May be Okay

Generally speaking, younger investors have more years ahead of them to invest. That means they are often able to put a higher percentage of their money in stocks and a very low, or even zero, percentage in bonds. How much you allocate to stocks will depend on factors such as your own investment objectives and your ability to tolerate risk.

If you know that you’re prone to panicking during market declines, however, you may want to keep your portfolio in more conservative investments than your age and investment horizon would normally indicate.

It’s much better to be a bit more conservative and hold on to your investments during market downturns, than to buy riskier assets and sell during market crashes!

3.  Speak with a Professional

If you’re like most Americans, chances are you spend more time researching your next car than researching your investments!

Investing can be a difficult – and sometimes dry – subject. Learning about the history of the stock market, your own risk tolerance, and behavioral biases that can trip you up is challenging for most people and probably something you don’t want to spend a lot of time on.

That’s where a trusted financial planner can help.

A good financial planner can help guide you along the path in planning for your own financial goals; explain difficult concepts; help you discover your own risk tolerance; recommend appropriate investments based on those risk tolerances; and help you avoid making the behavioral mistakes that ruin so many people’s portfolios.

A good financial planner also understands the history of the market and knows that, while bull markets don’t last forever, declines are generally temporary as well. Knowing that, and having a plan tailored to your specific financial goals will help you to avoid panicking when markets go south, and avoid making the behavioral mistakes that ruin so many people’s portfolios.


Brad Sherman is a financial advisor based in Gaithersburg Maryland who is experienced in understanding both the history of the market, as well as how behavioral biases affect investor returns. He has a Masters in Quantitative Finance from American University and over a decade’s worth of experience in the financial industry.

If you think it may make sense for you to hire a financial advisor, call him today to see if you are a good fit.



Not Investing Yet? Here Are 4 Simple Steps To Get You Started


Close your eyes for a moment and envision where you’d like to be in 30 or 40 years… Are you sailing to Tahiti? Writing that book? Running your vineyard? Building a new company?

If you had trouble envisioning where you’d like to be, you’re not alone. But unless you can visualize it, unless you’ve got your destination planned, it can be hard to get there. That’s why it’s so important to start thinking about what your goals currently are – whether it’s for yourself, your career, your startup, your art, and/or your family – and take the first – or the next – steps to invest in your future.

What does investing mean? Very simply, it means putting your money somewhere you expect it to grow. It can be traditional stocks, bonds and mutual funds, or real estate, collectibles, annuities, and other things that are expected to gain value over time.

When you’re just starting out, thinking about – and setting aside money for – your future can feel like a challenge; when you’ve just set up your first lemonade stand and barely breaking even, it’s hard to think about re-investing part of your profits in lemon groves that will someday produce income for you.

The trick is to overcome inertia, get started, and make a commitment, even if it’s just a tiny first step.

Inertia is not your friend

Inertia is one of the biggest reasons people waste opportunities to started investing when they’re young.

Objects at rest tend to stay at rest:

If you’re not investing yet, or if your money is sitting in a non-income producing bank account it can be hard to get started or get moving.

Objects in motion tend to stay in motion:

If your money is constantly in motion, if you’re spending everything you make, or if your money is following the crowd to the next big glamour stock, it can be hard to slow down and take stock with a Financial Planner to build a solid foundation.

A study by Hewitt Associates found, for instance, that only 31% of employees in their 20s invest in their company’s 401K plan¹. That means almost 70% of young employees who could be investing in a matching 401k plan haven’t started taking advantage of what is essentially free money. Whether inertia is keeping them from getting started, or inertia is keeping their money in motion so that there’s none left over to invest, they are not only leaving free money on the table, they’re not letting that money grow through compounding.

According to an article in US News and World Report, if you start investing just $100 a month in your 20s, increase contributions as your income increases, and make good financial decisions along the way, you are on your way to potentially retiring with over 1 million dollars.²

How Do You Get Started?

Here are four simple steps to get you past inertia and get you started.

  • Find your motivation

We are all passionate about certain things. The more you care, the more focused you are about achieving your goals. Make a list of the things that are important to you and the things you want to achieve.

  • Find extra money

There are only two ways to “find” money – spending less or making more. While it may seem daunting – inertia again! – you’d be surprised by how easy it is to discover places you can cut back a little or spend a little less. And, while you have a lot more control over your spending than your earnings, you can also look for ways to find extra sources of income, work more hours, or even get a better paying job.

  • Move financial goals up

If you plan to save “whatever you have left” or “whatever you’ve saved” at the end of each month, don’t be surprised by how little that actually is. We all have a tendency to spend what we have, and spend more as our income goes up. You can avoid that pitfall by paying yourself first. When you prioritize saving in your budget and take that money “out of circulation,” your spending will fall in line.

  • Get advice from an adviser you trust

The world of finance and investing can be complicated and confusing. Don’t let fear of the unknown keep you from getting started. You don’t need a large amount of savings to meet with an adviser who can answer a lot of your questions. Getting a roadmap from someone who knows the territory will help you get started and may allow for a smoother journey.

Investing in your future is an investment in yourself. If you take these four simple steps, even with limited assets, you’ll be laying the foundation for a lifetime of investing in your own plans and goals, and your own vision of financial freedom.


All investing involves risk, including the possible loss of principal. There can be no assurance that any investing strategy will be successful. Investments offering higher potential rates of return also involve a higher level of risk.

Learn more about our Investment Management services.

Related Reading:

What is Dollar Cost Averaging?

5 Things Investors Get Wrong

5 Big Picture Things Many Investors Don’t Do

Behavioral Investing: Men are from Mars and Women are from Venus!



5 Important Planning Tips for New Parents


Expecting a visit from the stork soon or has it already dropped off a new bundle of joy? If so, you know the full range of emotions that come with a growing family. Along with the love and excitement you feel with a new baby boy or girl, comes the pressure of new responsibilities and additional financial obligations.

Babies change your life in many ways, including requiring large amounts of time and money. While you may already be thinking about childcare costs and options, or about paying the medical bills that accompanied your new child, there are several other – important – financial considerations you should be thinking about even before the new baby arrives.

Evaluate Financial Priorities. It’s important to consider both short-term and long-term expenses that come with the addition of a new family member. It is a natural impulse, for instance, to want to put your child first and redirect retirement savings into college savings. But remember, you can borrow for college but you cannot borrow your way through retirement. It’s also important to balance long-term goals, like retirement and college expenses, with current financial needs, to help you allocate resources in an appropriate way.

Update Insurance Needs and Your Will. With the expansion of your family, insurance needs can change significantly. Having enough insurance is important in feeling confident about your family’s financial future. Adding your child to your health insurance policy can usually be done with a phone call. Making sure you have enough life insurance for both parents can help ensure you have the funds to raise your child if the unthinkable happens. Short-term disability insurance provides benefits if you have an accident that takes you out of work temporarily. Long-term disability insurance is critical in case a major accident has a permanent impact on your ability to work and earn. While some companies offer disability insurance, it can also be purchased independently.

Updating your will or creating a trust can provide care instructions for your child and allocate resources for their upbringing. Without a will or trust, if you and your spouse die, the state will decide who will raise your children. A will establishes your wishes for who will care for your child. A trust can direct funds specifically earmarked for raising your children and can be an effective way to cover financial expenses and provide for college expenses.

Start Planning For College Early. The sooner you start the better. While it is impossible to know exactly how much you’ll need to save – given that you don’t know what kind of college your child will choose – consider that in 2013-2014 the cost of a moderate in-state public university was $22,826 per academic year and the cost of a “moderate” private university averaged $44,750, according to a College Board survey. ¹

For new parents this means that college could cost over $100,000 for a public college and more than double that number for private school. Instead of trying to fund the entire cost of their education, determine how much you want to contribute. Having children be responsible for a part of their education is often a good lesson in work ethic, even if you can afford to pay for everything, and a critical life lesson if you can’t.

Keep Spending and Debt under Control. When you have an adorable child it’s very easy to overspend. You want them to have the best of everything. Setting a budget and sticking with that can help you keep your spending in line with your established budget. This can also help you maintain the discipline needed to continue contributions to long-term financial goals like retirement and their college education. And remember, the best gift you can give your children – your time and attention – is free.

Another important consideration is debt. When you carry debt, you are paying today for yesterday’s bills. Investing potentially allows you to pay today for tomorrow’s bills. By keeping yesterday’s bills settled and debt to a minimum, you lay the foundations for having enough to enjoy today with your children and plan for tomorrow.

Teach Children About Finances At An Early Age. Finances are a part of our daily lives. When you involve children early on they gain an appreciation for what things cost and how to choose what we want and what we can live without. As soon as your child old enough, start helping save their pennies for something they really want, and teach them that work is part of the process of earning money. These skills, if taught early, can lead to a lifetime of responsible money management.

Parenting is an amazing adventure that changes the way you see yourself and the world. Keeping an eye on finances can provide you with the confidence you need to not only enjoy your growing family but help lay the foundations for a stronger future.




It’s National 529 Day!

National 529 Day

Friday, May 29 is “National 529 College Savings Plan Day,” to raise awareness about the benefits of college savings plans.

Surprisingly, nearly 70% of Americans are unsure of exactly what types of college savings plans are available. Are you one of them?

If you have children, a college savings plan should be considered as an important part of a diversified long-term savings plan!

With all 50 states and the District of Columbia offering at least one type of college savings plan, many states also offer state tax favored treatment of contributions to those who use their state’s plan. And, in honor of National 529 Day, many states are having promotional offers.

Don’t procrastinate when it comes to your child’s future. Sherman Wealth Management can offer further information and detailed explanations with regards to opening and contributing to a diversified college savings plan. With Sherman Wealth Management’s experience, you can start saving for your child’s future today.



Withdrawals from a 529 Plan used for qualified higher education expenses are free from federal income tax. State taxes may apply. Withdrawals of earnings not used to pay for qualified higher education expenses are subject to tax and a 10% penalty. Participation in these plans does not guarantee that contributions and the investment return on contributions, if any, will be adequate to cover future tuition and other higher education expenses or that a beneficiary will be admitted to or permitted to continue to attend an institution of higher education. The plan is not a mutual fund, although it invests in mutual funds. In addition to sales charges, the plan has other fees and expenses, including fees and expenses of the underlying mutual funds. The plan involves investment risk, including the loss of principal.